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How do American's Spend Their Money?

American's Spending Habits

The New York Times published this mind-boggling graph (click on the graph to enlarge it) that delves into the spending habits of Americans at different income levels. A striking observation is that, according to this graph, people in the lowest fifth are spending about twice as much as they earn. The article points out that "if we compare the incomes of the top and bottom fifths, we see a ratio of 15 to 1 and if we turn to consumption, the gap declines to around 4 to 1." What observations can you make from the graph?

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sundrops sundrops 8 years
I agree with Mandy, there are basic needs that everybody has no matter their level of income. That doesn't change just because you make less income.
ames3560 ames3560 8 years
Mandy - right on! The real differences you see are in education, taxes, and even "extracurriculars" such as entertainment and such. It kind of makes sense - you have more money - you can spend more on "other things." Also - as Mandy pointed out, you can't eat, live, etc for nothing... that's why its so hard for those on the very bottom to get ahead. They can't save, b/c just living costs more than they have. Awesome post Savvy.
DreaAST DreaAST 8 years
My family is right on track. We save and buy what is needed and no one does without. We definately do not live beyond our means but get what we want.
juju4 juju4 8 years
Mandy, I totally agree. I think the lowest 5th shows that there are way too many people out there that make less money than they need to survive. I don't think it shows that those people are living beyond their means simply because they want to live like Paris Hilton. Even by spending more than they make, it's still only $18,000. I can't imagine earning even that little. In cities like NYC or LA, I am sure it isn't even possible to have food, shelter, and clothing for $18K a year.
juju4 juju4 8 years
Mandy, I totally agree.I think the lowest 5th shows that there are way too many people out there that make less money than they need to survive. I don't think it shows that those people are living beyond their means simply because they want to live like Paris Hilton. Even by spending more than they make, it's still only $18,000. I can't imagine earning even that little. In cities like NYC or LA, I am sure it isn't even possible to have food, shelter, and clothing for $18K a year.
mandy_frost mandy_frost 8 years
One thing that nobody has pointed out is that, quite frankly, some things are needed. There has to be a certain threshold beyond which you CAN'T spend less. So, yeah, the lowest class is spending above their means, but can they really spend that much less on food? I don't think so.
julieulie julieulie 8 years
What I personally find the most interesting is that the highest fifth is still only paying $21,598 on average in taxes (per person, I realize). I live in a teeny tiny DC condo, make next to nothing off of my Ph.D. stipend, and my yearly rent just for me is $21,000 even.
brookrene brookrene 8 years
Not surprising at all to me either. I couldn't see the bottom graph well, but all the info i could see wasn't a shocker.
KansasNutmeg KansasNutmeg 8 years
I'm not surprised either...but I do often wonder how people in the bottom fifth make it...after awhile the credit has got to wear out and the debt becomes reality.
KansasNutmeg KansasNutmeg 8 years
I'm not surprised either...but I do often wonder how people in the bottom fifth make it...after awhile the credit has got to wear out and the debt becomes reality.
syako syako 8 years
another thing I just noticed is look how "telephone" has actually decreased in the past five years... has a lot to do with that adoption rate of cell phones!
syako syako 8 years
wow talk about some comprehensive work over at NYT. Great job. Things that stick out to me is the adoption rate of technology. Geez! I mean look how long it took us to adopt something so basic as electricity - and now look at that line for CELL PHONES! Crazy.I also noticed that despite a 35,000 difference in income, the bottom fifth and middle fifth spend in very similar ways. It makes you wonder how many in the bottom could be in the middle if they kept their spending in check...
syako syako 8 years
wow talk about some comprehensive work over at NYT. Great job. Things that stick out to me is the adoption rate of technology. Geez! I mean look how long it took us to adopt something so basic as electricity - and now look at that line for CELL PHONES! Crazy. I also noticed that despite a 35,000 difference in income, the bottom fifth and middle fifth spend in very similar ways. It makes you wonder how many in the bottom could be in the middle if they kept their spending in check...
Shopaholichunny Shopaholichunny 8 years
Not surprising at all. Most people spend over their means. It's the culture/society that we live in. Everyone wants the biggest/newest/shiniest things even though they might NOT be able to afford it at all. People want to "look" like they are made of money.
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